| Tue 10 Aug 2010, 7:30 | | FBR - Famous Brands Limited - Good Food Good Beer Great Cheer - Famous |
|
FBR
FBR
FBR - Famous Brands Limited - Good Food, Good Beer, Great Cheer - Famous
Brands Acquires Keg and Mcginty`s
Famous Brands Limited
(Incorporated in the Republic of South Africa)
Registration number: 1969/004875/06
Share Code: FBR
ISIN: ZAE000053328
("Famous Brands")
GOOD FOOD, GOOD BEER, GREAT CHEER - FAMOUS BRANDS ACQUIRES KEG AND McGINTY`S
Famous Brands has acquired the franchise agreements, trademarks and
intellectual property of the Keg and McGinty`s brands for a purchase
consideration of R27 million. The acquisition will be funded through
existing cash resources, marginally increasing the ratio of net borrowings to
equity to 32% from the 28% reported at February 2010.
Keg is a franchised pub and restaurant brand, while McGinty`s is a franchised
pub brand. There are currently 28 Keg and 5 McGinty`s franchised outlets in
South Africa, Zimbabwe and Mauritius. The transaction is subject to a due
diligence exercise. Assuming successful fulfillment of this suspensive
condition, the effective date of the acquisition is 01 September 2010.
In the Group`s annual report published in May 2010, Famous Brands stated that
the company had evolved its strategic intent, thereby expanding its previous
narrow focus on Quick Service Restaurants (QSR) and Casual Dining, to include
the broader leisure category, while remaining true to its core competency of
food service.
CEO, Kevin Hedderwick says, "The acquisition of Keg and McGinty`s is our
first foray into pure leisure. Our strategic intent is to focus on what we
do best, namely food service, but in order to continue unlocking value for
stakeholders, we have had to consider the broader leisure category in our
search for further growth opportunities."
Jason Kruger, corporate advisor to the current owner of the brands, The
Kempston Group, says, "The Kempston Group is currently refocusing on its core
assets and businesses which relate mainly to the transport industry and
associated activities, and is thus disinvesting from certain non-core
activities. Famous Brands is seen to be an excellent successor, who we
believe has the ability to continue enhancing the value of these brands and
provide excellent support to our loyal franchisees."
Hedderwick is very familiar with the pub and restaurant category, and the Keg
brand specifically, having been the Managing Director and a shareholder in
Keg Franchising (Pty) Ltd from 1995 to 1997, a business which he and his
partners sold to JSE-listed Kingco in 1997.
"At one point the collective Keg and McGinty`s network comprised around 65
restaurant pubs in South Africa, with representation in Australia as well.
Despite the southern African footprint having reduced in size to a network of
33, and the brand no longer trading in Australia, the Keg brand remains
category leader in the defined themed pub and restaurant franchised business,
which speaks volumes for its equity amongst South African consumers," says
Hedderwick.
According to Hedderwick the pub and restaurant category as a whole has
declined in recent years, largely as a result of brands failing to reinvent
themselves and remain contemporary and relevant in line with changing
consumer dynamics. "However there are a number of independently owned pub
restaurants that are growing in popularity, which underlines that there is
good growth potential within the category for skilful operators," he says.
"Of late there has also been a strong revival in the pub restaurant category
in the US and UK with the evolution of what is referred to as `gastro pubs`
which essentially represent a repositioning of the tired old-style pub
category which had become over-dependant on the serving of alcohol to
survive," he says.
Hedderwick notes that growth prospects for the Keg brand in particular are
favourable. "While the brand needs innovation and renovation, we are
confident that we can restore its rich heritage as a pub and restaurant
business, where the emphasis is on the food. In an overall sense, this
repositioning will be based on the three pillars which underpinned the
brand`s popularity in its heyday, namely good food, good beer, great cheer -
and in that order. This iconic brand was, and once again needs to be,
perceived by the South African consumer as their `local` - their `home from
home,`" he says.
Key to this acquisition are the synergies and benefits to be extracted from
integrating both brands into the Group`s comprehensive business model, which
existing franchisees will benefit from with immediate effect.
"This transaction is in line with our stated philosophy of accumulating best
in class franchised brands, or brands that once acquired, we can make best in
class. Our business imperative is to grow and develop leading franchise
leisure brands, supporting them with a business model which maximises
stakeholder value creation," he says.
Hedderwick concludes, "Keg and McGinty`s are welcome additions to our
robustly expanding brand portfolio, and are part of a deliberate strategy
implemented by the Group to make full use of our strong balance sheet to
acquire relevant food service brands with compelling upside potential at a
time when in certain instances values might be suppressed due to the current
economic climate. Our firmly entrenched brand stewardship model continues to
serve us well and has proven our ability to manage a wide repertoire of
brands within the franchised food service market. Our profit and earnings
performance over the years since this journey started is evidence of this,"
he says.
"As growth opportunities and synergies are extracted, the earnings enhancing
nature of this acquisition will provide further reason to delight our
stakeholders," Hedderwick concludes.
Notes to editors:
The Group`s brand portfolio includes Steers (516), Wimpy including UK (651),
Debonairs Pizza (309), FishAways (107), Mugg & Bean (109), tashas (5), House
of Coffees (24), Brazilian Cafe (44) Blacksteer (10) and Giramundo (4). The
Group also manufactures and supplies its franchisees and the retail trade
with a wide range of meat, sauce, bakery, ice cream, fruit juice and mineral
water products.
For further information:
Kevin Hedderwick Del-Maree English
Chief Executive Officer Investor Communications
Famous Brands Ltd Mobile: 083 395 8608
Telephone: 011 651 5812
Famous Brands` website: www.famousbrands.co.za
Midrand
9 August 2010
Sponsor
Standard Bank
Date: 10/08/2010 07:30:02 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
